vadilal industries - wordpress.com 26 financials – q4 & fy16 performance 6 78.0 89.7 403.4...

VADILAL INDUSTRIES Q4 & FY16 Results Presentation

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Disclaimer

Certain statements in this document may be forward-looking statements. Such

forward-looking statements are subject to certain risks and uncertainties, like

regulatory changes, local political or economic developments, and many other

factors that could cause our actual results to differ materially from those

contemplated by the relevant forward-looking statements. Vadilal Industries will

not be in any way responsible for any action taken based on such statements and

undertakes no obligation to publicly update these forward looking statements to

reflect subsequent events or circumstances.

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Table of Contents

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Q4 & FY16 Performance

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Chairman’s Message

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Commenting on Q4 & FY16 performance, Mr. Rajesh Gandhi, Chairman and Managing Director, Vadilal Industries Limited (VIL) said:

“We have delivered 15% revenue growth in Q4. The ice cream business grew 21% while processed foods has focused on branded products and exports. Margins have continued to expand based on volume growth, focus on personalized packs and lower cost of raw materials/packaging/transportation. However, we have taken provisions pertaining to previous years in the now discontinued unbranded processed foods business. These relate to inventory, receivables and other costs amounting to about Rs. 1 crore in Q4 and of Rs. 3 crore in FY16. Despite these one-time provisions, we have delivered substantial growth in standalone margins during FY16. In addition, our US subsidiary that markets both ice cream and processed foods has turned around during the year. The Vadilal brand is increasingly gaining traction in our focus markets. We recently launched an ad campaign with our new brand ambassador, actress Pareeniti Chopra. Processed foods is also gaining critical scale in key export markets and volume expansion can improve margins. In the current year, we see continuation of last year’s growth momentum. Volumes will aid greater utilization of current capacities, working capital discipline will be maintained and operating cash flows will be used to reduce debt further. Overall, we see factors such as greater affordability, preference for ice creams, changing weather patterns and improving power situation increase consumption in India. In addition, strong visibility for our brand, deep penetration from a substantial distribution network, focused product development and a stronger balance sheet allow us to penetrate the markets and deliver market

outperformance.”

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Financials – Q4 & FY16 Performance

6

78.0 89.7

403.4 444.5

Q4 FY15 Q4 FY16 FY15 FY16

Revenue

Standalone financials in Rs. cr

65.0 78.6

344.3 393.9


Ice Cream

13.7 11.3

62.3 51.1


Processed Foods

• In Q4, VIL delivered 15% y-o-y growth driven by 21% y-o-y higher revenues in ice cream business. Revenue growth of 14% in ice cream during FY16 was driven by 11% volume and 3% value.

• In FY16, revenues from processed foods division was subdued on account of discontinuation of unbranded businesses.

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7

4.7 5.5

34.2

56.1

Q4

FY1

5

Q4

FY1

6

FY1

5

FY1

6

Ice Cream - PBIT

-0.4 -1.7

-0.6

-6.6

Q4

FY1

5

Q4

FY1

6

FY1

5

FY1

6

Processed Foods - PBIT

• Expanded volumes in the ice cream segment helped

increase utilization levels. This combined with lower input costs enhanced performance.

• Continue to focus on branding/advertising to improve

visibility and augment penetration into existing markets, appointed Pareeniti Chopra as new brand ambassador.

• In processed foods division, the aim is to target key export markets to aid volumes with enhanced margins.

• Processed Foods business performance adversely impacted due to one offs relating to discontinued unbranded business.


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8

6.3 5.9

40.9 57.9

Q4

FY1

5

Q4

FY1

6

FY1

5

FY1

6

EBITDA

-2.3 -3.1

1.9

14.4

Q4F

Y1

5

Q4F

Y1

6

FY1

5

FY1

6

PAT

• In FY16, EBIDTA grew 42% y-o-y leading to margin

expansion of 310 bps as the company gained from weak dairy commodity prices, lower packaging and transportation costs.

• Gross margin expansion of over 500 bps in FY16 also reflects benefits accrued from our focus on selling individually packaged ice creams apart from stable input costs.

• In FY16, PAT grew by 644% as expanding margins, focused working capital initiatives and lower debt have created operating efficiencies and substantially improved profits.


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Marketing initiatives – Thrust towards Premiumization

• Parineeti Chopra was recently announced brand

ambassador for Vadilal.

• Vadilal also unveiled three new ice creams – a Belgian

chocolate-based bar branded Badabite Select; a new

premium variety of Flingo centre filled cones; and new

variants of Gourmet super premium ice cream tubs.

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Financials Performance Trends

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11

236.5 285.8

330.1 371.7 403.4

444.5

FY11 FY12 FY13 FY14 FY15 FY16

Revenue

38.9 48.1

60.2 73.9

62.3 51.1


Processed Foods

198.8 236.0 265.5 294.0 344.3

393.9


Ice Cream


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In the past, consumer behavior was largely subdued. With improving consumer sentiment and stable input costs VIL is likely to maintain the growth trajectory in the coming years. VIL is now reaping benefits of substantial investments in adopting technology across various aspects of the business. As volumes enhance, existing capacity gets utilized more efficiently and margins which were depressed in the past are likely to improve, aiding overall financial performance.

25.1 36.8 40.5 39.1 40.9

57.9

0

20

40

60

80

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

EBITDA

5.1 6.3 6.0

1.4 1.9

14.4

0

5

10

15

20

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6PAT


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Financials Performance Trends – Balance Sheet

13

231.2 224.9 224.0

FY1

4

FY1

5

FY1

6

Net Fixed Assets

19.6 18.1

16.9

FY1

4

FY1

5

FY1

6

Other Non-Current Assets

15.2 16.5 20.6

FY1

4

FY1

5

FY1

6

Other Non-Current Liabilities

115.1 115.1 128.1

FY1

4

FY1

5

FY1

6

Networth

205.0 180.2 148.3

FY1

4

FY1

5

FY1

6

Debt

84.5 68.8 56.05

FY1

4

FY1

5

FY1

6

Net Current Assets


Vadilal Industries Overview

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Overview

• Currently managed by fourth generation promoter family

• Selected India’s most trusted ice cream brand in 2013 and 2014 by the Brand Trust Report

108-year old, established ice cream brand

• Top 3 ice-cream brand in the country , 150+ flavors

• 300 SKU’s of cones, candies, bars, ice lollies, cups, family packs, economy packs

Largest range of ice creams of any company in India

• Leadership in Gujarat, Rajasthan, UP, Uttarakhand, Haryana and Chandigarh

Second largest ice cream manufacturer in India by volume

• 16 states, 50 CNF’s, over 800 distributors, 250 distribution vehicles, 55,000 retail outlets

Strong distribution network in North, West and East India

• Products reach 45 countries across four continents

• 80% contribution from exports in processed foods segment Expanding global business

presence

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Indian Ice Cream Market

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• Ice cream is transitioning from periphery to mainstream, from occasional indulgence to snacking option

Evolving perceptions

• Transition from seasonal to year-long consumption

Changing demand patterns

• Increased disposable incomes and discretionary spending driving secular demand growth

Growing affordability

• Consumers receptive to spending on high quality products that meet their rising aspirations

Premiumization trends

• Shift from limited portfolios of traditional products to innovative, global-standard offerings

Innovative product development

• Local brands competing with international players, leading to market expansion

Expanding customer choices

• India’s current annual per capita consumption of 400 ml vs 2.3 liters world average, Chinese consumption is 20X India’s

Significant headroom for growth

• Rapid expansion of retail network leading to product availability and convenience

Nationwide retail expansion

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• Expanding footprint in North and East regions of India

• New production facility expected in East India

• Expanding distribution footprint in tier 3/4 cities and rural markets

• Constantly innovating to roll out new products in ice cream segment

• Targeting expansion of market share in premium/super-premium segment

• 5,000 new sales outlets planned in FY16

• 50 new branded ice cream parlors and 50 more distributors expected to be added in FY16

• Investments in new technologies

• Seen as one of the most trusted ice cream and leading food brand in India

• Undertaken campaigns to strengthen social media presence

• Rural marketing initiatives

Vadilal: Growth Strategies

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Geographical Expansion

Brand Building Initiatives

New Product Development

Retail Investments

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Ice Creams - Brands Portfolio

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Processed Foods Business

• Global business selling to 45 countries in four continents

• Strong distribution to Indian diaspora, being further developed with

new product launches

• Expanded export markets from 12 SKU’s supplied to seven countries

in 1991 to 100+ SKU’s to 45 countries currently

• Expanded domestic market from 18 SKU’s sold in Gujarat in 2000 to

75+ SKU’s available in five Indian states currently

– Vadilal Quick Treat brand has expanded presence to

Maharashtra/Mumbai

• Aggressively expanding frozen food line, exited from low margin,

mango pulp business

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Processed Foods - Brands Portfolio

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• Processed foods products are

marketed under the brand name

‘Quick Treat’

• Portfolio includes frozen vegetables,

ready-to-eat/ready-to-serve frozen

snacks, Indian breads and curries

• Positioned to assist Indian kitchens

with traditional home cooking

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Production Facilities

• Capacity expanded across production facilities over the last three years,

• Current production on automated processes “untouched by hand”, manual intervention only at packaging stage

• Discontinuing production of non-branded canned pulp products to focus on branded portfolio

• No further capital expenditure anticipated on capacity enhancement over the next three years

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Facilities Capacity Production Certification

Bareilly 175,000 liters per day

Ice cream ISO-22000:2005

Dharampur 33,000 kgs per day Processed foods ISO-22000:2005 and BRC : Issue 6

Pundhra 175,000 liters per day

Ice cream ISO-22000:2005 and BRC : Issue 6

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Distribution Presence

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Gujarat

Rajasthan

Madhya Pradesh

Chhattisgarh

Orissa

Delhi Haryana

Jammu & Kashmir

Himachal Pradesh

Uttar Pradesh

Bihar

West Bengal

Distribution network comprises of 55,000 retailers, over 800 distributors, 50 CNFs, 250 distribution vehicles and almost 300 SKUs. Adopted the franchisee route to further increase market penetration and established 250 ice cream parlors under ‘HAPPINEZZ’ brand name Access to the largest fleet of refrigerated vehicles in India, backed by an expanding distribution network

Bareilly

Production Facilities

Pundhra

Dharampur

Uttaranchal

Jharkhand

Chandigarh

Punjab

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Awards and Accreditations

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Outlook

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Planned Initiatives

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Corporate Transition

Discontinuation of non-branded/ bulk processed foods to aid debt

reduction

Planned merger of Vadilal Industries (manufacturing entity) and Vadilal

Enterprises (distribution entity)

Product Strategies

Focus on higher value products and margin expansion – targeting 5%

pricing improvement in the backdrop of weak cost of inputs and

distribution

Sales & Marketing push – accelerating new product

development and increasing spend on promotional activities

Expanding Presence

Presence across 16 states, 50 CNF’s, over 800 distributors, 250

distribution vehicles, 55,000 retail outlets

Increasing penetration into 24 states in India – moving from passive to aggressive business strategy to derive benefit from improving

consumer behavior

Supply Chain Initiatives

Aggressive expansion of sales generating assets/cold supply chain –

annual planned addition of 5,000+ deep freezers

Augmenting distribution management system that will allow micro-control over ROI from each

business area and point of sale unit

Rs. 175 crore has been invested over last three years to expand capacity and related infrastructure, currently planned initiatives will further leverage this investment

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5/30/2016 27

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